Kidney tubules arise from a population of multi-potent progenitor cells located within the metanephric mesenchyme. During kidney development, a balance is struck between amplification and differentiation of these progenitors to assure the proper number of nephrons form. Failure to induce differentiation can lead to hypoplasia and cancers whereas a failure to maintain and amplify the stem cell population to its proper size can lead to defects in nephron endowment. Either outcome has a significant negative impact on survival. Wnt9b is essential for both stem cell proliferation and differentiation. Both of these roles appear to depend on the downstream effector beta-catenin. How the same molecule can trigger these distinct cellular programs is unknown. To gain insight into Wnt9b function, we performed microarray analysis on mutant kidneys. We found that several factors, including Fat4, were overexpressed in the stromal cells of mutants. To address whether the stroma might be signaling to the progenitor cells, we genetically ablated this lineage using an inducible Diptheria toxin model. We found that kidneys lacking stroma had an expanded progenitor population and fewer nephrons. Interestingly, we found that Fat4 mutants have a similar phenotype to the stromaless kidneys. Based on our preliminary data, we propose that Wnt9b functions in part to repress the expression of stromal factors. Further, we propose that signals from the stroma, encoded at least partially by Fat4, function to promote differentiation of the progenitors. This is accomplished by preventing beta-catenin from activating progenitor maintenance genes while promoting the expression of genes involved in differentiation. We hypothesize that Fat4 regulates differentiation of the progenitors by activating the Hippo/Warts pathway in a subset of progenitor cells. This activation of Hippo and Warts, two serine/threonine kinases, results in the phosphorylation and nuclear export of the downstream transcriptional regulators Taz and Yap. Nuclear export of Taz and Yap then leads to cellular differentiation. In this proposal, we have two main aims: Aim 1: Define the mechanism for Fat4 action on the Wnt pathway. Aim 2: Determine how Wnt9b signaling regulates stromal identity. The data collected here will establish new paradigms for how the kidney progenitor cells are maintained. Further, they will establish the molecular basis behind stromal/epithelial crosstalk in the embryonic (and potentially adult) kidney. These discoveries should have broad impact on the field of kidney development and disease treatment.